Mass. Proposes Medicaid Drug Formulary, Private Option

Conservative approach could be tested in "best-case scenario"

Massachusetts has proposed two significant changes to its Medicaid program: a closed drug formulary and a "private option."

In each case, the impact of the change will depend on how its implemented and with what objectives in mind, wrote Benjamin Sommers, MD, PhD, and Aaron Kesselheim, MD, JD, MPH, of the Harvard T.H. Chan School of Public Health, in a recent New England Journal of Medicine editorial.

One idea, shifting a portion of the state's near-poor adult enrollees onto private plans -- the so-called "private option" -- has been tested two other states -- New Hampshire and Arkansas.

The second, creating a closed drug formulary, would be uncharted territory with "potentially far-reaching implications," wrote Sommers and Kesselheim.

"Given the strong historical commitment to health care access in Massachusetts and the state's well-funded administrative infrastructure for health care, its proposal would arguably test a Medicaid formulary in a best-case scenario," they added.

The upside of a drug formulary is its potential to reduce spending for drugs that haven't shown clinical benefit. In FY 2016 about 10% of MassHealth's spending went towards medicines that either CVS or Express Scripts, or sometimes both, don't cover, the editorial noted.

Such a formulary could also help the state to negotiate better prices for other drugs, the editorial suggested.

But it also stressed that formulary setting needs to be done in a "politically independent, evidence-based and transparent way." And a formulary that's overly restrictive could block patients from access to needed treatments.

In an email to MedPage Today, Kesselheim said he would support a "well-designed and patient-centered" formulary "based on transparent and justifiable rules."

"I think that the outlines provided by [Massachusetts] in its waiver suggest that [it] also has those goals in mind," he added.

If such a formulary is implemented, whether in Massachusetts or another state, oversight and evaluation would be critical, he stressed.

With regard to the second proposed change, shifting 140,000 enrollees with incomes at 100%-138% of the federal poverty level (i.e., Medicaid expansion enrollees) from Medicaid to private plans, the authors were similarly optimistic.

Advocates of the private option argue that because private plans pay doctors more than Medicaid, the move would increase access to care. The approach might also lessen "income-related churning" and leverage "private market efficiencies" to enhance care quality, proponents suggest.

However, those opposed to the idea suggest that moving from Medicaid to a marketplace plan will spell higher cost-sharing, fewer benefits and increased administrative costs for enrollees, the editorial noted.

"Although affordability and coverage rates could potentially worsen under this model," in this context, the program would likely return to the state's pre-ACA "RomneyCare" policies (named after former Republican Gov. Mitt. Romney) which, the authors noted, increased access to care and improved health outcomes.

The Massachusetts proposal also includes certain sweeteners, such as limited dental coverage and one "zero premium plan option" as well as a cap on out-of-pocket spending, that is even lower than that of the Affordable Care Act.

Approval from the Centers for Medicare and Medicaid Services is not a sure bet, noted the authors.

Proposals from Republican administrations in Iowa and Oklahoma have already seen "unexpected delays" and "it's possible that even policies with a conservative orientation will get bogged down in the ACA's political quagmire."

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